The Morning View from West End: June 6, 2018

Announced this morning, the latest report on unit labor costs indicates a 2.9% increase in the first quarter, slightly higher than expected. In addition, nonfarm productivity increased just 0.4% for the first quarter. Higher productivity typically helps to keep inflation in check when wage growth is accelerating. While we have yet to see wage growth accelerate to this point in the economic cycle, one wonders when that will change considering last week’s strong jobs report and reports that the number of job openings has exceeded the number of unemployed workers. For now, inflation remains in check and the Federal Reserve will likely continue with a measured pace of interest rate increases. In all, equity futures and yields are higher this morning heading into the market open.